SuperForce.com Over Ride Events (SORE)
When comparing the advanced method using the phantom QQQ (Nasdaq 100 index stock) for the year 2000 against 2001, something has slowed the growth in 2001. We still show a gain for 2001 but it is small in comparison with 2000, where the average growth per month was 13.70% non-compounded. The average growth for the QQQ in 2001 is only 1.2% per month.
The first five months of 2001 have been plagued with the Fed lowering interest rates by 0.5% drop on four separate occasions. Two of these were surprise announcements catching the markets off guard. Did these Fed announcements interfered and override the expected SuperForce.com forecasted direction of the markets?
The first surprise announcement from the feds came on Jan 3rd. We happened to be in a Short and the markets took off in the opposite direction. The result was the largest gain with the NASDAQ both percentage and points. Our method then went into a long, however the profit takers moved in and forced the markets down. When our method began to short, things began to stabilize but not after losing –27.26% in 4 business days.
On Jan 31 the Fed then announced another 0.5% drop in interest rates, many wanted more and the markets fell in response. We happened to be in a long at the time and lost another –4.20% in the following four business days.
On April 18, 2001 The Federal Reserve unexpectedly lowered Interest rates by ½ point, this in turn caused the markets to gain substantially and overrode our forecast for the remainder of the week. We happened to be in a short (wrong direction again) and lost –10.42% on that trade.
On Tuesday May 15 the Fed announced an expected 50 point (1/2%) rate cut with further cuts possible in the future. Nothing really happened on the 15th but on the 16th the markets reacted favourably pushing the markets way up which continued into our next short. Finally on the 22nd profit takers moved in and pushed the markets lower during our long. By the 25th the markets stabilized. I have calculated that the resulting waves created from the 15-25 resulted in a –4.86% within 8 business days.
-27.26% -4.20% -10.42% -4.86% Total loss –46.74%
We refer to these periods as SuperForce.com Overriding Events (SORE). These events interfere with the expected market directions as forecasted on the SuperForce.com site. Major SORE periods occur with Interest rate movements, Presidential elections, War breaking out, large Earnings warning by a Large Cap company, Massive Solar Storms… These events are not common, however when they do occur they can have an immediate overriding effect and a resulting ripple effect that can last for 4-8 Business Days causing the markets to bounce in the wrong direction two or three times before following the method.
A good example of this effect is like predicting the waves in a pond and someone unexpectedly throws a large rock into the pond, the resulting waves caused by the unexpected rock that change the waves in the pond for a short period of time until everything subsides and the pond waves are once again predictable.
If you were playing the monthly system on the QQQ for the first five months of 2001 and sat on the sidelines during the four major SORE periods you would have gained 9.34% per month average. Had these SORE events not occurred the method should be within last year’s average monthly gains.
A Minor SORE period is the occasional earning warning from a large or mid cap stock, OPEC announcements, merger announcements from large public companies, minor solar storms…These Minor SORE periods usually last one or two days at the most and are common occurrence once every few weeks.
We have seen a few minor (SORE) events recently. On Wednesday May 23rd it was discovered that, Vermont Senator James Jeffords was to announce on Thursday that he was leaving the Republican Party and declared himself an independent, giving Democrats control of the U.S. Senate for the first time since 1994. Resulting SORE effect –3.75% loss using our advanced method.
The Sun Micro warning on Tuesday May 29 and the surprise that Europe was nearing a recession Resulting SORE effect –4.34% loss.
Other frequent lesser events that do not override the forecast are often used as excuses at the end of the trading day by the analysts to explain the days upward or downward direction in the markets. What is great about these excuses is that they can be used to explain both the upward market and a few days later the same excuse can be used to explain a downward market.
The method has continued to rebound from each Major and Minor SORE period in 2001. These SORE periods do not represent the forecast as being incorrect as it still applies through these periods to behavioural swings, health effects and athletic performance. They only override the Stock Market behaviour.
The purpose of pointing out these SORE periods is to show that there are minor events that can override the forecast for short periods (1-2 days) and Major events that can override the forecast for 4-8 days within the Stock Markets.Sincerely,Guy Cramer, President
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